Tag Archives: Blue Owl Capital

It is a specific sound, nothing compares to that and it isn’t entirely fictional. Some might remember the Walter Hill movie Streets of Fire (1984) where two men slug it out with hammers, but that is not it. When a Warhammer slams into metal armor, the armor becomes a drum and that sound is heard all over the battlefield (the wearer of that armour hears a lot more than that sound) but is distinct and I reckon that some of those hammer wielders would have created some kind of crescendo on these knights. So that was ‘ringing’ in my ears when NPR gave us ‘Here’s why concerns about an AI bubble are bigger than ever’ a few days ago (at https://www.npr.org/2025/11/23/nx-s1-5615410/ai-bubble-nvidia-openai-revenue-bust-data-centers) and what will you know. They made the same mistake, but we’ll get to that.

The article reads quite nicely and Bobby Allyn did a good job (beside the one miss) but lets get to the starting blocks. It starts with “A frothy time for Huang, to be sure, which makes it all the more understandable why his first statement to investors on a recent earnings call was an attempt to deflate bubble fears. “There’s been a lot of talk about an AI bubble,” he told shareholders. “From our vantage point, we see something very different.”” So then we get three different names all giving ‘their’ point of view with ““The idea that we’re going to have a demand problem five years from now, to me, seems quite absurd,” said prominent Silicon Valley investor Ben Horowitz, adding: “if you look at demand and supply and what’s going on and multiples against growth, it doesn’t look like a bubble at all to me.” Appearing on CNBC, JPMorgan Chase executive Mary Callahan Erdoes said calling the amount of money rushing into AI right now a bubble is “a crazy concept,” declaring that “we are on the precipice of a major, major revolution in a way that companies operate.” Yet a look under the hood of what’s really going on right now in the AI industry is enough to deliver serious doubt, said Paul Kedrosky, a venture capitalist who is now a research fellow at MIT’s Institute for the Digital Economy.” All three names give a nice ‘presentation’ to appease the rumblings within an investor setting. Ben Horowitz, Mary Callahan Erdoes and Paul Kedrosky are seemingly mindset on raking in whatever they can and then the fourth shines a light on this (not in the way he intended) we see “Take OpenAI, the ChatGPT maker that set off the AI race in late 2022. Its CEO Sam Altman has said the company is making $20 billion in revenue a year, and it plans to spend $1.4 trillion on data centers over the next eight years. That growth, of course, would rely on ever-ballooning sales from more and more people and businesses purchasing its AI services.” Did you see the setting. He is making 20 billion and investing $1.4 trillion, now that represents a larger slice and the 20 billion is likely to make more (perhaps even 100 billion a year. And now the sides of hammers are slamming into armour. That still will take 14 years to break even and does anyone have any idea how long 14 years is and I reckon that $1.4 trillion represents (at 4.5%) implies that the interest is $63,000,000,000. That is almost the a year of revenue and that is the hopefully glare if he is making 100 billion a year. So what gives with this, because at some point investors make the setting that the formula is off. There is no tax deductibility. That is money that is due, the banks will get their dividend and whomever thinks that all this goes at zero percent is ludicrously asleep and that is before the missing element comes out. 

So then in comes Daron Acemoglu with “A growing body of research indicates most firms are not seeing chatbots affect their bottom lines, and just 3% of people pay for AI, according to one analysis. “These models are being hyped up, and we’re investing more than we should,” said Daron Acemoglu, an economist at MIT, who was awarded the 2024 Nobel Memorial Prize in Economic Sciences.” He comes at this from another angle and gives us that we are investing more than we should. All these firms are seeing the pot at the end of the rainbow, but there is the hidden snag, we learned early in life that the rainbow is the result of sunlight on rainwater and it is always curves t be ‘just’ beyond the horizon and it never hits the ground and there will be no pot of gold at the end of it according to Lucky the Leprechaun (I have his fax number) but that was not the side I am aiming for, but it gives the idiocy we see at present. They are all investing too much into something that does not yet exist, but that is beside the point. There are massive options for DML and LLM solutions, but do you think that this is worth trillions? It follows when we get to “Nonetheless, Amazon, Google, Meta and Microsoft are set to collectively sink around $400 billion on AI this year, mostly for funding data centers. Some of the companies are set to devote about 50% of their current cash flow to data center construction.

Or to put it another way: every iPhone user on earth would have to pay more than $250 to pay for that amount of spending. “That’s not going to happen,” Kedrosky said.” This comes from Paul Kedrosky, a venture capitalist who is now a research fellow at MIT’s Institute for the Digital Economy, and he is right. But that too is not the angle I am going for. But there are two voices, both in their field of vision, something they know and they are seeing the edges of what cannot be contained, one even got a Nobel Memorial Prize for his efforts (past accomplishment) And I reckon all these howling bitches want their government to ‘safe’ them when the bough breaks on these waves. So Andy Jassy, Sundar Pichai, Mark Zuckerberg and Satya Nadella (Amazon, Google, Meta and Microsoft) will expect the tax system to bail them out and there is no real danger to them, they might get fired but they’ll survive this. Andy Jassy is as far as I know the poorest of the lot and he has 500 million, so he will survive in whatever place he has. But that is the danger. The investors and the taxpayers (you and me) get to suffer from this greed filled frenzy. 

But then we get “Analyst Gil Luria of the D.A. Davidson investment firm, who has been tracking Big Tech’s data center boom, said some of the financial maneuvers Silicon Valley is making are structured to keep the appearance of debt off of balance sheets, using what’s known as “special purpose vehicles.””, as well as “The tech firm makes an investment in the data center, outside investors put up most of the cash, then the special purpose vehicle borrows money to buy the chips that are inside the data centers. The tech company gets the benefit of the increased computing capacity but it doesn’t weigh down the company’s balance sheet with debt.” And here we get another failure. It is the failure of the current administration that does not adapt the tax laws to shore up whatever they have for whatever no one has and that is the larger stakeholder in this. We get this in an example in the article stating “Blue Owl Capital and Meta for a data center in Louisiana”, this is only part of the equation. You see, they are ’spreading the love’ around because that is the ‘safe’ setting and they know what comes next. You see the Verge gave us ‘Nvidia says some AI GPUs are ‘sold out,’ grows data center business by $10B in just three months’ (at https://www.theverge.com/tech/824111/nvidia-q3-2026-earnings-data-center-revenue) and that is the first part of the equation. What do you think will power all this? That is the angle I am holding onto. All these data centers will need energy and they will take it away from the people like you and me. And only 4 hours ago we see ‘Nvidia plays down Google chip threat concerns’ and it is all about the AI race, which is as I said non-existent, but the energy required to field these hundreds of thousands of GPU’s is and no one is making a table of what is required to fuel these data centers because it is not on ‘their plate’ but the need for energy becomes real and really soon too. We do not have the surplus to take care of this and when places like Texas give us “Electricity demand is also going up, with much of it concentrated in Texas due to “data centers and cryptocurrency mining facilities,”” with the added “Driving the rise in wholesale prices next year is primarily a projected 45% increase at the Electric Reliability Council of Texas-North pricing hub. “Natural gas prices tend to be the biggest determinant of power prices,” the EIA said. “But in 2026, the increase in power prices in ERCOT tends to reflect large hourly spikes in the summer months due to high demand combined with relatively low supply in this region.”” Now this is not true for the whole world, but we see here a “projected 45% increase” and that is for 2026. So where are these data centers, what are their energy surpluses and what is to come? No one is looking at that, but when any data centre is hit with a brownout, or a partial and temporary drop in voltage in an electrical power supply. When that happens any data centre shuts down, energy is adamant for all its GPU’s and their better not we any issue with energy and I saw this a year ago, so why isn’t the media looking into this? I saw one article that that question was not answered and the media just shoved it aside, but as I see it, it should be on the forefront of any media setting. It will happen and the people will suffer, but as I see it (and mentioned) is that the media is whoring for digital dollars and they need their advertisement money from these 4 places and a few more, all ready for advertisement attention and the media plays ball because they want their digital dollars (as I personally see it).

So whilst the NPR article is quite nice, the one element missing is what makes this bubble rear its ugly head, because too many want their coins for their effort and it is what is required. But what does the audience require? And the audience is you an me dear reader. I have set a lot of my requirements to energy falling short, but there is only so much I can do and it is going to be 32 degrees (celsius) today, so what happens when the energy slows down for 5.56 million people in Sydney? Because the Data centers will make a first demand from their energy providers or they will slap a lawsuit worth billions on that energy provider. And we the people (wherever we are) are facing what comes next. Keeping data centers cool and powered whilst we the people boil in our own homes. As such that is the future I am predicting and people think I am wrong, but did they make the calculation of what these data centers require? Are they seeing the energy shortfalls that are impeding these data centers? And the energy providers will take the money and the contracts because it won’t coexist to this, but that is exactly what we are facing in the short run and the investors? Well, I don’t really care about them, they invested and if you aren’t willing to lose it all with a mere card to help you through (card below), you aren’t a real investor, you are merely playing it safe and in that world there are no bubbles.

Remind me, how did that end in 2008? The speculated cost were set to $16 trillion in U.S. household wealth, and this bubble is significantly larger than the 2008 one and this time they are going all in on money, most of them do not have. So that is what is coming and my fears do not matter, but the setting that NPR gives us all with ‘Here’s why concerns about an AI bubble are bigger than ever’ matters and that is what I see coming.

So have a great day and never trust one source, always verify what you read through other sources. That part was shown to be when we all see (from various sources) that “The United States is on track to lose $12.5 billion in international travel spending this year” whilst my calculations made it between 80 and 130 billion and some laughed at my predictions a few months earlier and I get that. I would laugh too when those ‘economics’ state one amount and I come with a number over 700% larger. I get that, but now (apparently) there is an Oxford economics report that gives us “Damning report says U.S. tourism faces $64 billion blow as Trump administration’s trade wars drive away foreign visitors and cut spending”, so I have that to chase down now, but it shows that my numbers were mostly spot on, at least a lot better than whatever those economics are giving you. So never trust merely one source even if they believe to be on the right track. But that is enough about that and consider why some bubble settings are underexposed and when you see that the NPR gave you three additional angles and missed mine (likely not intentional) consider what those investment firms are overseeing (likely intentional) because the setting that they are willing to lose 100% is ludicrous, they have settings for that and as the government bailed them out the last time, they think it will save them this time too.

Have a great day today, I need an ice cream at 4:30 in the morning. I still have some, so yay me.